Varun Beverages Q4 results: Net profit rises 25.2% to Rs 537.3 crore

PepsiCo's bottling partner focuses on reducing sugar content in beverages

Varun Beverages, the largest bottling partner for beverage company PepsiCo, on Monday reported a 25.2 per cent year-on-year (Y-o-Y) increase in net profit to Rs 537.3 crore in the quarter ended March 31.

The company reported a net profit of Rs 429.1 crore in the same period last year. It follows the January-December financial year.

"In spite of a delay in the Holi festival by 17 days resulting in a delayed seasonality cycle, we are pleased to report a reasonably strong overall operational and financial performance in the first quarter of the year,” said Ravi Jaipuria, chairman, Varun Beverages.

“Our sustainability efforts, including the focus on reducing sugar content, removal of corrugated pads in packaging, and light-weighting of packaging material have started showing results by an increase in gross margins,” he added.

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The company reported a 10.9 per cent uptick in net sales to Rs 4,317.3 crore from Rs 3,893 crore in the year-ago period. The bottler reported volume growth of 7.2 per cent, with a 3.5 per cent growth in net realisation per case in the first quarter. Its profit before interest, depreciation and tax (Pbidt) rose 23.5 per cent to Rs 997 crore from the year-ago period.

The company said 46 per cent of its consolidated sales volumes came from low-sugar or no-sugar products. The bottler is working to reduce the sugar content of beverages, including Mirinda, 7UP, and Pepsi in India.

“We are making a constant effort to reduce the sugar content in the beverages. We have also got a new formulation for zero calories, zero sugar Gatorade from PepsiCo,” the management said in a post-earnings call with investors.

The company also commenced operations at three Greenfield facilities located in Supa, Maharashtra; Gorakhpur, Uttar Pradesh; and Khordha, Odisha.

“This expansion is designed to meet the rising demand for beverages in India and support our long-term growth trajectory,” said Jaipuria.

The company also completed in the last quarter the strategic acquisition of the South Africa-based Beverage Company (BevCo), which operates five plants in the country.